The chairman of John Howard and Jeff Kennett’s audit commissions, Bob Officer, has urged the incoming Abbott government to follow Queensland’s example and cut thousands of inefficient jobs from education and health bureaucracies in its first term.

One of Treasurer-elect Joe Hockey’s first decisions in office will be to establish a commission of audit charged with finding savings across federal agencies.

Mr Hockey wants the commission to deliver an interim report with recommendations in time for his first budget.

Professor Officer said the new government should act quickly on the audit’s findings and avoid the more ­cautious reform path adopted by NSW Premier Barry O’Farrell, a message that will be welcomed by some Liberal MPs who want the government to copy the unpopular cuts that Mr Howard made in 1996 to return the budget to surplus.

“The earlier you start, the greater the benefits – particularly for a government potentially facing a second term,” ­Professor Officer said.

Asked whether he thought Mr Hockey would drive hard enough for cuts and reform, he said: “I suspect not. I’m an economist – I believe you should be doing these things harder.”

Prime Minister-elect Tony Abbott declared Australia “open for business” as he arrived in Canberra on Monday to meet public service chiefs, who assured the new government they would ­co-operate with the Coalition’s plan of continuous “close engagement” with business.

In his first six weeks of government, Mr Abbott will meet Maurice Newman, the inaugural chair of the Prime Minister’s Business Advisory Council, which will be the most important business conduit to federal cabinet.

Business leaders to be asked to advise

Dozens of business leaders will be asked to serve the new Coalition government as advisers on everything from coal seam gas to the management of the Australian Taxation Office.

The new government plans to spend about $1 million on its commission of audit, raising questions about whether it will have the resources for a thorough review of the government, which spends $400 billion a year.

Queensland Premier Campbell Newman spent $2.2 million on an audit of his government, which was headed by former treasurer Peter Costello.

Stephen Anthony, a budget forecaster at Macroeconomics in Canberra, said the money was insufficient given the audit should be an “ongoing process for at least 12 months”, similar to the Labor government’s review of the taxation system by then Treasury secretary Ken Henry.

“They should spend the money and time and use that process to generate a plan to address the structural budget deficit,” he said.

“They need a bunch of eminent Australians and a whole bunch of boffins underneath who know what’s going on, as well as academic expertise.”

A spokesman for Mr Hockey said the audit would tap into Treasury resources. One reason Queensland’s audit cost as much as it did was because the state Treasury department lacked its federal equivalent’s analytical capacities, forcing the Newman government to bring in more outside expertise, sources said.

The new government has promised to cut 12,000 public servants. It says the measure will save more than $5.2 billion over four years. Mr Hockey has noted the public service grew by some 20,000 people under Labor since 2007.

Professor Officer said many of the unused recommendations of his 1996 federal audit for Mr Howard remain relevant today, including cutting unnecessary bureaucratic overlap between the states and Canberra.

“If this government is serious about reducing costs and the bureaucracy, this is an obvious way to go, in my opinion,” he said.

“I still believe there are significant savings to be made in giving greater responsibility to the states and therefore incurring less agency cost in the direction of health and education and welfare distribution.

Efficiency is key to growth: Officer

“Those on the left say ‘they’ve got this plan to beat everyone up,’ but from my point of view, I don’t think anyone, including Rudd, has denied we’ve got to get growth into this economy and that’s about efficiency.

“I don’t think there’s any doubt Hockey and Abbott want the growth and are after the efficiencies and reductions and a smaller bureaucracy, but it’s a question of how willing they are to really test the political will.

“Use the mandate – you’ll get push back, it’s inevitable,” he said.

Professor Officer is the former chair of finance at Melbourne University’s business school and chaired former Victorian premier Jeff Kennett’s 1992 audit. He said Saturday’s election presented the Coalition with a mandate to implement policies which benefit most Australians over the interests of what would be small but loud groups opposed to change.

“You’ve got to have a pretty thick hide,” he said. “That was one of Kennett’s strong points. He was able to push ahead and get change.”

Professor Officer agreed with warnings from agencies including Treasury, the Parliamentary Budget Office and private sector consultants such as Deloitte Access Economics that ­Australia faces long-term structural budget problems, largely driven by rising social spending commitments and an ageing population.

“I do think there needs to be a significant look at that [and] I might remind you Howard left a structural deficit so that this is not relatively new,” he said.

“You don’t have to rush back into a surplus, but you want to be careful about what you’re spending on.”

Unlike in Victoria in the early 1990s, the job facing Mr Hockey is closer to the challenge faced by Mr Costello in 1996, according to Professor Officer.

Call for person outside politics to head audit

“[Paul] Keating left a large debt, but not a real mess,” he said. “And I’d say the same thing here, there’s a lot more debt than we should have incurred – we can argue long and hard about the GFC and how that should have been tackled – but I wouldn’t class it as the mess that Victoria was in when [former premiers [John] Cain and [Joan] Kirner left it.

“[Kennett’s government] had no option but to take some drastic steps.

“Of course people are still bleating about it, but you can see the benefits today.”

The Queensland audit called for the sale of energy companies worth $25 billion, reduced recurrent spending and 20,000 fewer public servants. The Newman government cut 14,000 jobs.

Professor Officer said the Coalition should appoint someone from outside politics to the federal audit.

“The politicians can then dress is it up how they like, as indeed Howard did with our report,” he said. “They’ll hand-pick through it for the things that justify their prejudices.

“One would like to think their prejudices run to greater economic efficiencies, but politics will often get in the road.”